HL Display Group Fourth Quarter and Full-Year Report January December 2012

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1 PRESS RELEASE Contact: Gérard Dubuy, CEO Magnus Bergendorff, CFO Telephone: +46 (0) Internet including image archive: HL Display Group Fourth Quarter and Full-Year Report January December 2012 Net sales for January - December amounted to MSEK (1 643). This is an increase of 1 per cent compared with the same period in Operating profit for the year was MSEK 103 (63). Profit before tax amounted to MSEK 70 (24) and net profit to MSEK 42 (18). Non-recurring expenses for January -December amounted to MSEK 21 (39) and were charged to the operating profit. The EBITA margin for the year was 6.3 (3.9) per cent. Net sales for October - December amounted to MSEK 409 (411). This is on the same level as the same period Operating profit for the fourth quarter of the year was MSEK 24 (-1). Profit before tax amounted to MSEK 18 (-11). Non-recurring expenses for October - December amounted to MSEK 6 (19) and were charged to the operating profit. The EBITA margin for the fourth quarter of the year was 5.9 (-0.2) per cent. Statement by the CEO During 2012, HL Display achieved a clear profit improvement, despite a continued difficult market. Operating profit increased to MSEK 103 (63). This is positive as it is clear evidence that our measures are delivering results. Net sales increased by 1 per cent to MSEK 1,657. This is below our goal and something we are not satisfied with. It has been difficult to see any clear trends in our particular market during the year. The situation has differed from geographical region to region and there have also been significant differences between individual countries in the regions. We have found that customers are generally a little more cautious with their investments than previously. Improved profit during the fourth quarter Operating profit for the fourth quarter amounted to MSEK 24, compared with MSEK -1 in the same period last year. The improvement is mainly due to two things. Firstly, we have had positive effects of the cost reduction program we implemented in the fall. Secondly, we had somewhat lower non-recurring costs than in the previous year. We can also see an underlying improvement of the gross margin, which had a positive effect on the profit for the fourth quarter. Increased sales in UK, Norway and Russia During the entire year, sales in Great Britain, as a part of region UK, and Norway, as a part of region North Europe, has been very good. This trend continued also in the fourth quarter even though the growth rate was somewhat lower than earlier in the year. Sales in Russia continues to increase. We have established new partnerships with several major local brand manufacturers. Negative trend in South Europe In region South Europe, the negative trend continued during the fourth quarter. Sales decreased by 21 per cent compared with the same period in Many of the countries in the region are affected by the crisis in Europe. This is clearly reflected in our sales in those countries. In France, HL Display's second-largest individual market, the trend was also negative during the year. Stable development in Asia/Australia In region Asia/Australia, we can see that the growth rate has slowed down somewhat during the fourth quarter from being very good during the beginning of the year. We have noticed increased caution among our customers in this region, probably as a result of the uncertain situation in the US and Europe. The most important thing for us going forward is to increase our market coverage in order to take advantage of the potential that exists in the region. That is the motive behind the China Booster project, which is aimed at creating the conditions for substantially increased sales in China. Positive effects in the production During the fourth quarter, parts of the extensive changes we are currently making have moved into the final phase. This includes the production review, which brought us the first positive effects in the form of lower production costs. The last step of the production transfer, to move production from Falun to Gliwice, has been carried out during In December, we reached the same quality levels for the production in Gliwice as we had before the move. The work is now focused on further improvements in order to reach one of the targets we had with the production move to give customers even faster and better service. HL Display is Europe s leading supplier of products and solutions for merchandising and in-store communication. With more than 50 years experience, the company is experts at displaying products in stores in a way that increases sales and makes the store work more efficient, at the same time as providing end consumers with all the information required to make a purchasing decision. 1

2 Fourth Quarter and Full-Year Report January December 2012 Continued uncertain market In summary, we are facing a continued uncertain market situation and it is difficult to predict how it will develop in the future. I feel that the diversification we have through our multinational operations has been a strength during the year. The negative trend in for example region South Europe has been compensated by good growth in other markets and regions. We are obviously working to create the conditions for increased sales, and our efforts include measures implemented in the sales organisation. The cost-reduction program we went through in the autumn means that we enter 2013 with lower costs, which is a way for us to keep good preparedness in uncertain times. Nacka Strand, February, 2013 Gérard Dubuy CEO Financial information Net sales and profit 2012 The Group s net sales amounted to MSEK (1 643) for 2012, representing an increase of 1 per cent compared to Adjusted for currency effects, net sales increased by 2 per cent, or MSEK 27, in comparison to last year. The gross margin is 43 (44) per cent. The operating expenses (excluding freight), that amounted to MSEK 519 (533), were on a somewhat lower level compared to last year. The operating profit for the period amounted to MSEK 103 (63). Non-recurring costs amounting to MSEK 21 (39) were charged to operating profit. These costs are mainly related to restructuring of the production to Poland. Operating profit adjusted for non-recurring costs amounted to MSEK 124 (102). Financial net for the period amounted to MSEK -33 (-38), of which net interest represented MSEK -32 (-39) and exchange rate effects represented MSEK -1(1). Profit before tax amounted to MSEK 70 (24). Net sales and result for the fourth quarter 2012 Net sales for the Group amounted to MSEK 409 (411), about the same level compared to the same period in Adjusted for currency effects, net sales increased by 1 per cent, or MSEK 5, in comparison to last year. The gross margin for the fourth quarter was 43 (44) per cent. Operating profit for the quarter amounted to MSEK 24 (-1). The operating profit was charged with non-recurring costs amounting to MSEK 6 (19). Operating profit adjusted for nonrecurring costs amounted to MSEK 30 (18). Net financial items amounted to MSEK -6 (-10), of which net interest represented MSEK -8 (-11) and exchange rate effects represented MSEK 2 (1). Profit before tax amounted to MSEK 18 (-11). Sales by region 2) Sales in the market regions UK (+11%), Asia/Australia (+11%) and East Europe (+7%) developed positively during 2012 compared with the previous year. (Percentage increases are measured in local currency.) (Sales development for each region is reported in the tables on page 4. For a definition of the company s regions, see note 2.) Investments For January - December, net investments in non-current assets amounted to MSEK 51 (53). Scheduled depreciation amounted to MSEK 40 (38). During the fourth quarter, net investments in non-current assets amounted to MSEK 11 (8). Scheduled depreciation for the same period amounted to MSEK 10 (9). During the year, 23 MSEK for projects in progress have been reclassified from tangible assets to intangible assets. Cash flow and financial position Cash flow during 2012 amounted to MSEK 11 (-43). Loans have been paid with MSEK 59 (65). Cash flow from operating activities has improved to MSEK 120 (75). During the fourth quarter, cash flow amounted to MSEK 36 (11), whereof cash flow from operating activities was MSEK 77 (57). Cash and cash equivalents amounted to MSEK 175 (163) as of 31 December Interest-bearing net debt amounted to MSEK 396, at the beginning of the year MSEK 469. The equity ratio on 31 December 2012 was 55.8 per cent. Employees The number of employees at December 31, 2012, was 1,162 (1,158). Corporate report 2012 A Corporate report for HL Display 2012 will be available to download from the company s website, Other HL Display Holding AB is 99 per cent owned by Ratos through their wholly owned subsidiary HL Intressenter AB. HL Display applies IFRS. This report has not been prepared in accordance with IAS 34 Interim Financial Reporting. 2

3 Fourth Quarter and Full-Year Report January December 2012 Summary of consolidated income statement Oct - Dec Oct - Dec SEK (000s) Net Sales 408, ,731 1,656,875 1,643,317 Cost of goods sold/services sold -232, , , ,705 Gross profit/loss 175, , , ,612 Selling expenses -104, , , ,487 Administrative expenses -40,728-41, , ,859 Research and development expenses -5,927-5,771-21,622-20,779 Other operating income/expenses -1,032-19,288-1,467-27,852 Results from participations in group companies Operating profit/loss 23,809-1, ,696 62,635 Financial net -5,619-10,020-33,128-38,413 Profit/loss before taxes 18,190-11,189 69,568 24,222 Income tax expense -4,873 4,005-27,955-5,844 Profit/loss for the period 13,317-7,184 41,613 18,378 Summary of consolidated balance sheet SEK (000s) 31-Dec Dec-2011 Goodwill 1,153,934 1,157,309 Other Intangible assets 48,853 9,666 Property, plant and equipment 195, ,515 Financial assets 24,943 36,705 Total non-current assets 1,423,506 1,430,195 Inventories 155, ,120 Current receivables 318, ,406 Cash and cash equivalents 175, ,219 Total current assets 648, ,745 Total assets 2,071,975 2,102,940 Equity 1,156,308 1,122,778 Non-current liabilities 487, ,262 Current liabilities 428, ,900 Total equity and liabilities 2,071,975 2,102,940 HL Display AB (publ) +46(0) (0) info@hl-display.com Box

4 Sales development per region 2) Change, % Change, % Sales development per region 2) Change, % Change, % Fourth Quarter and Full-Year Report 2012 Summary of consolidated cash flow statement Oct - Dec Oct - Dec SEK (000s) Profit before taxes 18,190-11,189 69,568 24,222 Depreciation 10,219 9,826 39,555 37,547 Other items not affecting cash flow -3,320 1,079 4,045 3,328 Income tax paid -4,717 13,886-18,277-5,796 Change in working capital 56,381 43,514 25,286 15,592 Cash flow from operating activities 76,753 57, ,177 74,893 Investing activities -10,976-7,934-50,597-52,816 - whereof aquisition of subsidiary, net Financing activities -29,325-38,145-58,754-65,049 Net Cash flow for the year 36,452 11,037 10,826-42,972 Cash and cash equivalents at beginning of the period 135, , , ,309 Foreign exchange difference in cash and bank balances 2,854-1,489 1, Cash and cash equivalents at end of the period 175, , , ,219 External net sales Reported currency Local currency North Europe 399, , East Europe 301, , South Europe 416, , UK 379, , Asia/Australia 146, , Other sales 13,047 10, Consolidated 1,656,875 1,643, External net sales Oct - Dec Oct - Dec Reported currency Local currency North Europe 103, , East Europe 84,132 75, South Europe 91, , UK 88,419 84, Asia/Australia 36,680 34, Other sales 4,645 3, Consolidated 408, ,

5 Fourth Quarter and Full-Year Report 2012 Key figures the last eight quarters 1) Q 4 Q 3 Q 2 Q 1 Q 4 Q 3 Q 2 Q 1 SEK (000s) Net sales 408, , , , , , , ,545 Operating profit/loss 23,809 24,883 26,613 27,391-1,169 18,526 24,201 21,077 EBITA-margin % No. of employees, end of period 1,162 1,164 1,214 1,178 1,158 1,134 1,132 1,139 Key figures group 1) MSEK Net sales 1,657 1,643 1,617 1,360 1,536 Operating profit/loss EBITA margin, % EBT margin, % Return on equity, % Return on capital employed (%) Equity/assets ratio, % Interest-bearing net debt Debt/equity ratio, times Notes 1) For definitions of key ratios, please refer to HL Display AB s annual report 2011, page 37. 2) HL Display s operating segments from May 2012: North Europe (, Norway, Finland, Germany, Switzerland, Austria, Slovenia, Serbia, Denmark, Iceland); UK (UK including PPE and Ireland); East Europe (Russia, Ukraine, Latvia, Lithuania, Turkey, Poland, Czech republic, Hungary, Slovakia, Romania, Bulgaria, Estonia, Kazakhstan and Israel); South Europe (France, Spain, Belgium, The Netherlands, Middle East, Portugal, Italy, Greece and Malta); Asia /Australia (China, Hong Kong, India, Indonesia, South Korea, Malaysia, Singapore, Thailand, Taiwan, Australia/New Zealand). 3) Comparative figures pro forma for 2010 refers to previously reported results for the HL Display Group for each period but adjusted as if the acquisition had taken place at the beginning of The adjustment has been done by adding a theoretical interest expense. The contents of this press release have not been audited or reviewed by the company s auditors. Nacka, February 15, 2013 Gérard Dubuy Managing Director and CEO 5